Quicker tax write-offs for businesses legislation advances in House

A bill that would permanently extend so-called bonus depreciation advanced in the House on Thursday, though the measure faces a big hurdle to becoming law this year.

The House Ways and Means Committee voted 23 to 11 for the break, which lets businesses accelerate write-offs for big purchases like machinery. The bill’s sponsor, Ohio Republican Pat Tiberi, says it will help companies better access their capital, invest in new facilities and create new jobs. The bill allows businesses to deduct half the cost of new purchases immediately.

The committee has been taking a piecemeal approach to a slew of expired tax breaks, such as bonus depreciation and the research-and-development credit. The Senate, meanwhile, is aiming to pass a two-year extension of the breaks.

Those differing approaches to the more than 50 breaks have slowed their renewal down. Analysts expect the breaks to be renewed only after the midterm elections. Henrietta Treyz of Height Analytics said in a note Thursday the Ways and Means hearings are instructive and could be indicative of future efforts on tax reform. But they are “highly unlikely” to produce legislation Congress will agree on this year, she said.

Thursday’s vote by the committee sends the legislation to the House floor. The full House has passed a permanent extension of the research-and-development credit – which the White House said President Barack Obama would veto.

In the Senate, meanwhile, the two-year bill hit a snag earlier this month as Democrats and Republicans argued about adding amendments to the legislation.

The left-leaning Center on Budget and Policy Priorities, meanwhile, called making the break permanent “economically unjustified and fiscally irresponsible.” The Joint Committee on Taxation estimates it would cost $263 billion over 10 years.

Rep. Sander Levin of Michigan, the top Democrat on the panel, predicted there is “no way” that Congress will make bonus depreciation permanent.